nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒08‒13
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Responsibility-based allocation of cartel damages By Stefan Napel; Dominik Welter
  2. Estimating a Demand System with Choke Prices By Golan, Amos; LaFrance, Jeffrey T; Perloff, Jeffrey M.; Seabold, Skipper
  3. The Strategic Industry Supply Curve By Flavio M. Menezes; John Quiggin
  4. Media Competition, Information Provision and Political Participation: Evidence from French Local Newspapers and Elections, 1944-2014 By Cagé, Julia
  5. Are Books Luxury Goods in Russia or not? By Nataliya Kochkina; Evgeniya Popova

  1. By: Stefan Napel; Dominik Welter
    Abstract: Anti-trust infringers are liable jointly and severally, i.e., any offender may be sued and forced to compensate a victim on behalf of all. EU law then grants the singled-out firm a right to internal redress: all infringers are obliged to contribute in proportion to their relative responsibility for the victim’s harm. We operationalize this for hardcore cartels. Responsibility is inferred from how much lower damages could have been, had one or more offenders refused to collaborate. This calls for applying the Shapley value to a model of overcharges. Resulting allocations are characterized for selected market environments and compared to ad hoc distributions based on market shares or profits. A new decomposition of the Shapley value helps to establish bounds on payment obligations.
    Keywords: cartel damages, damage allocation, Shapley value, joint liability, relative responsibility, rule of contribution
    JEL: L40 L13 D04 D43
    Date: 2017–08
  2. By: Golan, Amos; LaFrance, Jeffrey T; Perloff, Jeffrey M.; Seabold, Skipper
    Abstract: We present a new, information-theoretic approach for estimating a system of many demand equations where the unobserved reservation or choke prices vary across consumers. We illustrate this method by estimating a nonlinear, almost ideal demand system (AIDS) for four types of meat using cross-sectional data from Mexico, where most households did not buy at least one type of meat during the survey week. The system of de­mand curves vary across demo­graphic groups.
    Keywords: Social and Behavioral Sciences, demand system, choke prices, generalized maximum entropy
    Date: 2017–08–04
  3. By: Flavio M. Menezes (School of Economics, The University of Queensland); John Quiggin (School of Economics, The University of Queensland)
    Abstract: In this paper we develop the concept of the strategic industry supply curve, representing the locus of Nash equilibrium outputs and prices arising from additive shocks to demand. We show that the standard analysis of partial equilibrium under perfect competition, including the graphical representa- tion of supply and demand due to Marshall, can be extended to encompass imperfectly competitive markets, including monopoly, Cournot and Bertrand oligopoly and competition in linear supply schedules. We then derive a uni- fied theory of cost pass-through and show that it satisfies the five principles of incidence set out by Weyl and Fabinger (2013).
    Keywords: industry supply; cost pass-through; oligopoly
    JEL: D4 L1
    Date: 2017–08–04
  4. By: Cagé, Julia
    Abstract: This paper investigates the impact of increased media competition on the quantity and quality of news provided and, ultimately, on political participation. Drawing upon existing literature on vertical product differentiation, I explore the conditions under which an increase in the number of newspapers can decrease both the quantity and quality of news provided. I build a new county-level panel dataset of local newspaper presence, newspapers' newsrooms, costs and revenues and political turnout in France, from 1944 to 2014. I estimate the effect of newspaper entry by comparing counties that experience entry to similar counties in the same years that do not. Both sets of counties exhibit similar trends prior to newspaper entry, but those with entry experience substantial declines in the average number of journalists (business-stealing effect). An increased number of newspapers is also associated with fewer articles and less hard news provision. These effects are stronger in counties with more homogeneous populations, as predicted by my simple theoretical framework, whereas there is little impact in counties with more heterogeneous populations. Newspaper entry, and the associated decline in information provision, is ultimately found to decrease voter turnout at local elections.
    Keywords: hard news; media competition; newspaper content; political participation; size of the newsroom; soft news
    JEL: D72 L11 L13 L82
    Date: 2017–08
  5. By: Nataliya Kochkina (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics); Evgeniya Popova (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics)
    Abstract: In the times of Soviet Union books were a luxury good. This paper examines whether books are still a luxury good in Russia. For this purpose data from one of the Russian book retail chains is used to empirically estimate a general book demand and separate demand models for genres. We focus on estimating income elasticity. For this reason we construct a covariate on the basis of monthly wages of working individuals that reveals consumer income. Moreover, this paper is one of the few which addresses in detail the influence of books content quality on book demand. The main result is that books on average are not luxury goods anymore in Russia. However two genres: foreign prose and poetry are exceptions and can be called luxury goods. We also conclude that quality control covariates (book rating and number of people who rated the book) are important determinants of book demand as they influence significantly the general book demand and the demand models for different genres as well.
    Keywords: Russian book market, demand function, income elasticity, luxury goods, price elasticity
    JEL: L21 L23
    Date: 2017–07

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